Psychological Traps That Lead To Poor Decisions

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Psychological Traps That Lead To Poor Decisions

• Nothing is more difficult, and therefore more
  precious than to be able to decide Napoleon, 1804

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Challenges and Perspectives

• Its not what we dont know that gives us
  trouble, its what we know that aint so Will
  Rogers
• Experience is an expensive school Ben Franklin
• And it will fall out as in a complication of
  diseases, that by applying a remedy to one sore,
  you will provoke another, and that which removes
  the one ill symptom produces others Sir Thomas
  More
• We have met the enemy and he is us Pogo

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Policy Resistance Examples of Unintended
Consequences

• Labor saving devices are ubiquitous, but do
  Americans have more free time today?
• Levees have been designed to control flood
  waters, are we better off?
• Antibiotics have saved countless lives and thus
  have been widely prescribed. What risks do we
  face now?
• Antilock brakes and airbags have increased car
  safety but some studies suggest they also
  encourage people to drive faster.
• Over the last forty years parents and educators
  have emphasized the importance of building
  self-esteem but teen depression is at record
  highs.

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Psychological Barriers to Sound Decision Making

• What Gets In Our Way?

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Decision Traps(Russo Schoemaker,Decision
Traps, 1989)

• Traps
• Plunging In
• Frame Blindness
• Lack of Frame Control
• Overconfidence
• Poor Use of Heuristics
• Shooting from the Hip
• Group Failure
• Faulty Feedback

• Mitigating Strategies
• Meta-decisions
• Awareness of References
• Multiple Perspectives
• Contradicting Evidence
• Mindfulness
• Good Modeling
• Manage Group Process
• Decision Auditing

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Psychological BarriersOther Perspectives

• Hammond, Keeney Raiffa, Smart Choices, 1999,
  pgs. 189-216.
• Clemen Reilly, Making Hard Decisions, 2001,
  pgs. 311-328.

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Single-Loop Learning(Sterman, Business Dynamics,
2000)
Real World
Decisions
Information Feedback
Decision Rules
Mental Models
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Double-Loop Learning(Sterman, Business Dynamics,
2000)
Real World
Decisions
Information Feedback
Decision Rules
Mental Models
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Simulation Can Help(Sterman, Business Dynamics,
2000)
Real World
Decisions
Information Feedback
Virtual World
Decision Rules
Mental Models